Embattled Club Operator Lands as Gold’s Manager

INDIANAPOLIS -- A former gym owner who has been accused of bilking business partners as well as gym members admits he has made mistakes.

Shane Franklin is now the general manager at a Gold’s Gym in Indianapolis, but he previously operated clubs in San Diego and Reno, NV, under the Powerhouse Gym brand.

“Did I make a mistake? Absolutely,” Franklin said in an exclusive interview with Club Industry. “Did I do some things wrong that I probably shouldn’t have done? Yeah. You kind of have to stand up and say, ‘I did it.’ I’m not proud of what I did. I’m not happy with what I did. It was just the circumstances that happened.”

Franklin faced allegations of forgery and money mismanagement in Reno. In December, the Reno Police Department decided not to file charges against Franklin after an eight-month investigation.

“We focused on forgery allegations between business partners of Mr. Franklin,” Sgt. Scott Dugan of the Reno Police Department told Club Industry. “We suspended the case.”

In a story aired by a Reno TV station, Dugan said that the case had a lot of contradictory information that took away from the criminality of the acts. But Dugan later told Club Industry, “That wouldn’t mean that we couldn’t pursue a case in the future if there was enough evidence.”

Franklin also was accused of taking money for memberships to Reno gyms that never opened. That investigation, which is being handled by the Nevada attorney general’s office, is still open, but Franklin is not under active investigation, says Edie Cartwright, the public information officer for the Nevada attorney general.

Franklin says he has complied with requests from the Nevada attorney general’s office.

“In over a year now, [they have] gotten everything from me,” Franklin says. “I sat down with [them]. I completed full applications. I went through interviews. I gave [them] everything [they] needed as far as information on my behalf. I turned over bank accounts—everything. As far as the open investigation on my end of it, the state of Nevada, there’s really not much more to investigate on me.”

In San Diego, Franklin was accused of taking money for memberships for a Powerhouse Gym that did not open. (Two other Powerhouse clubs were open for about a month before closing, Franklin says.) The third club was supposed to open in July 2009, he says, but the required permits did not come through in time. Franklin, however, continued to sell memberships until November when, with no other investors, Franklin says he ran out of money.

“I didn’t know what to do,” Franklin says. “I had no money, no way of paying anything, so I packed my bags, sent my resumes to other clubs, and I sent out my resume to other organizations.”

Details were unclear about where the money collected for the San Diego gym opening as well as one in the Reno suburb of Sparks, NV, went and whether it was returned. Franklin did say that most of the money went to a direct mail marketing company and was refunded to members.

Powerhouse Gyms International, Farmington Hills, MI, told Club Industry that Franklin has nothing to do with the Powerhouse Gym name or trademark. In an October 2009 e-mail originally sent to Norm Cates of Club Insider that Powerhouse forwarded to Club Industry, Powerhouse Gyms said Franklin opened a Powerhouse club in 1999 in Bullhead City, AZ. After two years of operation, the Powerhouse license was pulled because of non-payment of license fees.

In February 2007, according to Powerhouse, one of its licensees opened a club in Reno, NV, and, against the company’s recommendation, the licensee brought Franklin into the club’s operation. Since that time, Powerhouse said in the e-mail, Franklin has sold memberships to clubs in Nevada and Arizona using a Powerhouse sign, but the clubs never opened. He also has taken over existing clubs and used a Powerhouse sign to sell memberships, Powerhouse said.

Powerhouse also said that Franklin was informed through calls, letters and e-mails that he was not authorized or allowed to use the Powerhouse Gym name in San Diego. Franklin, according to Powerhouse, told the company that he was operating under Franklin Fitness or Edge Fitness.

For the club that Franklin had hoped to open in San Diego, a Powerhouse Gym rug used as a sign for the club had “Reno” covered up. Powerhouse says that Franklin also was wearing a counterfeit Powerhouse T-shirt during a report that a San Diego TV station aired.

Powerhouse added in the e-mail that members of Franklin’s clubs told the company that they wrote their membership checks to Franklin Fitness and that the membership forms stated Silver State Fitness.

When asked about Franklin’s background and his new position at a Gold’s Gym franchise, Dave Reiseman, vice president of communications for Gold’s Gym International, Irving, TX, said that Gold’s franchisees do all of their own hiring and background checks independently.

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Franklin began working at Gold’s in Indianapolis on Dec. 15. He was hired by American Club Systems, Columbus, GA, which serves as a consulting company and handles the billing and management operations for the Gold’s Gym.

Von Hardin, national director for American Club Systems, has known Franklin for almost 15 years. Franklin has served as a manager for Hardin’s clubs in the past in Georgia and Tennessee.

Hardin says revenues for the Gold’s club are better than they have ever been since Franklin came aboard.

“The guy does a good job,” Hardin says. “He is a very knowledgeable individual. He does what he’s supposed to do. Whatever he’s supposed to have done [in the past], we’ve not seen anything like that. We’ve got enough controls and enough security in place that if anything [negative happened], we’d know about it before anybody else did.”

Hardin says Franklin puts in between 12 to 16 hours a day at Gold’s and calls him “a marketing genius.” Hardin, who says that he never had an incident with Franklin when he worked for him in the past, is aware of the reports about Franklin’s operations in Nevada and was contacted by Reno police, who told Hardin the results of their investigation.

“We went into this not with blind eyes,” Hardin says. “We went into this thing on a mutual agreement that we expect things to be run a certain way. I judge a person by what they’re doing right now and what they’re able to do and continue to do. As long as they’re telling me the truth, I don’t have a problem with them.

“Maybe he’s changed his ways, if that’s what they were,” Hardin adds. “I don’t know. We’ve got a microscope on him. It’s just human nature. If he tells us a lie, and we go back and find out it’s a lie, Mr. Franklin will be dismissed. It’s that simple.”

Franklin, who says he will hire an attorney in San Diego in anticipation of civil litigation there, says he’s trying to move on with his career.

“With everything that happened in Reno and California and stuff like that, I’m really just trying to look at maybe not owning anymore, just really managing like I know how to do,” Franklin says. “Unfortunately, there’s just too much responsibility on the owning end of it, and if you don’t have deep pockets on it, you get eaten up. And that was a hard lesson for me to learn.”